Battery Bottleneck

Electric battery-manufacturing dreams face a reality check as India struggles with raw materials, high costs and R&D

- Aditi Ray Chowdhury

On an April morning that President Donald Trump termed 'liberation day' for the US but left world markets to grapple with the tariff shocks from Washington, DC, a quieter but more consequential drama was unfolding in Beijing. China, on the brink of a trade war with the US, retaliated against the US' reciprocal tariffs by announcing a slew of export restrictions on rare earth elements, essential inputs in the defence, energy and automotive sectors.

What began as a power play between the two largest economies in the world had ripple effects across the globe. In India, where the electric-vehicle (EV) revolution is just picking up pace, the move struck at the heart of an emerging industry. Automakers across the country suddenly found themselves struggling to secure raw materials needed for the production of EVs.

In hindsight, the move was not unexpected. In 2010, China banned the export of rare earths to Japan over a fishing-boat dispute. More recently, between 2023 and 2025, China imposed export restrictions on strategic materials to the US.

But India’s troubles aren’t just about rare earths. The country’s EV ambitions face a more fundamental hurdle: the lack of homegrown capacity to produce key components for electric batteries, such as cathodes, anodes and electrolytes.

“All the restrictions that were put on rare earths in the past 18 months are quite similar to the restrictions by the Chinese government on anode and cathode in the past 18 months,” says Vikram Handa, founder and managing director, Epsilon Advanced Materials, a battery-manufacturing company.

Chained to Imports

In recent years, India’s push to become a serious player in battery manufacturing has gathered momentum. Battery-manufacturing companies like Amara Raja Energy and Mobility, and Exide are racing ahead with giga-scale battery-cell manufacturing facilities, fuelled by the government's Production-Linked Incentive (PLI) scheme.